Consumers To Sue Safeway For Not Using CRM Data For Recalls

Written by Evan Schuman
May 6th, 2010

Spurred on by the efforts of Costco, ShopRite, Wegman’s and other grocery chains to use CRM data to alert customers to product recalls, a consumer group said Thursday (May 6) it is about to sue the $41 billion 1,712-store Safeway chain because of the its “failure to notify consumers that they’ve bought potentially dangerous products [which] violates state consumer protection laws in Texas, the District of Columbia, New Jersey and California.”

The trend to use loyalty card data for product recalls is nothing new. Much of the motivation stems from a lawsuit against Kroger a half-dozen years ago. A customer of the chain ate beef contaminated with Mad Cow disease even though Kroger supposedly had more than enough time to have alerted her before she consumed the tainted product.

Since then, many chains have made the transition, including Giant, Harris Teeter, Price Chopper, ShopRite, Wegman’s and Costco. Costco has pushed it the most aggressively and also has been among the most visible proponents of using CRM data to communicate recalls. Some observers have suggested the recall programs strongly reinforce loyalty messages, while others point to mobile as the best way to notify customers.

On the other side, though, are retailers, who have strong worries. Once they assume the role of notifying consumers, what if someone gets missed? In a court case in Los Angeles, Macy’s resisted using CRM data to contact customers who had purchased lead-encrusted children’s jewelry, worried that some consumers might find it an invasion of privacy.

The nonprofit Center for Science in the Public Interest (CSPI) is the group threatening Safeway with litigation, unless the chain agrees to immediately start using its loyalty card data to alert customers to recalls.

“It shocks the conscience that a major retailer would sit on its hands, even though it has easy access to the E-mails, addresses and phone numbers of those who have purchased food that might be contaminated,” said CSPI Litigation Director Steve Gardner. “Perhaps Safeway saves a few pennies by remaining silent. But why would you knowingly risk letting your customers fall ill or, worse, die?”

Some chains have been worried that their data is organized in such a fashion as to make it very difficult to get notifications out in a sufficiently timely fashion. Still, with so many chains already having taken the plunge, that argument seems weak.

CSPI issued a statement in which it tried to use Safeway’s own Web site policy against the grocer. “According to the privacy policy on Safeway’s Web site, Club Card data ‘may be used to help make Safeway’s products, services and programs more useful to its customers.’ And the company reserves the right to ‘disclose personal information to our related companies and third parties,'” the statement said. “Yet, even when it has sold foods that might have been contaminated with E. Coli, Salmonella, botulism or other deadly hazards, Safeway does not use its Club Card information to prevent customers from eating that food.”


4 Comments | Read Consumers To Sue Safeway For Not Using CRM Data For Recalls

  1. Raja Jeevan Kumar Maduri Says:

    I do not see a reason why some retailers consider this as a matter of privacy invasion not considering the current technology and the data available off a CRM or Loyalty system it is pretty sleek to capture the transaction data. Systems can even keep track of what category and what product a particular customer has purchased over the past n number of years. Retailers are sending out such information only to watch out for their patrons. Retailers possibly can also prompt the customer at their point of sale terminals whether they be contacted about any critical information with respect to the purchases they make or for any marketing information (seek their approval over the pinpad or capture their signature to serve as an electronic proof) , which possibly will serve the purpose.

  2. Robert Martell Says:

    One would think sending information about some toxic product recall would be something less than an invasion of privacy.

    More likely, it might taint the retailer as having sold a bad product, and they aren’t going to want to do that!

    Collecting all that info on customers for whatever marketing or other business reasons should be at least worth the time and expense of alerting those same customers to something potentially dangerous or toxic. Give a little back to the consumer, can’t ya?
    Otherwise, there will be fewer of them.

  3. Evan Schuman Says:

    Robert makes a good point and I think he accurately identifies what some marketers fear about using CRM data to give customers a heads-up about a recall: “it might taint the retailer as having sold a bad product, and they aren’t going to want to do that!” But I believe that concern is silly. If a consumer gets an E-mail (or an instant message or even a phonecall) from the local grocery store saying that something he/she purchased yesterday has now been recalled for possible (fill in the name of the poison), is that consumer thinking “I hate you for having sold it to me” or “I love you for having saved my life and the lives of my family”? I think consumers are fairly forgiving about a well-kept chain that rarely gets contaminated goods. But the heads-up to a problem to save their life? THAT will make a consumer friend for life.

  4. Frank Wilson Says:

    I suspect their reluctance has less to do with invasion of privacy and more to do with legal liability. It’s a bit ironic that the same mechanism used to encourage them to do this (lawsuit by a consumer protection group) is also used to discourage them from doing it. If stores are notifying customers, which I think we can all agree would be a good thing for consumers, then they accept some legal risk for what happens if they don’t notify someone and they get sick. Or if they don’t notify them in time. Hopefully this next round of lawsuits will show them that it costs less to do the right thing.


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